TORONTO (Bloomberg) - Canadian stocks fell for a second day, led by Teck Cominco Ltd., as prospects of slower US growth sent industrial metal prices lower and dimmed raw-material companies' earnings outlook.

Royal Bank of Canada paced a drop in Canadian financial shares after Wells Fargo & Co. became the second US bank in two days to report higher mortgage losses. Federal Reserve chairman Ben Bernanke said yesterday that the housing slump may drag on through next year.

"People are nervous about housing and the mortgage backup," said John Kinsey, who helps manage $1.9 billion at Caldwell Securities Ltd. in Toronto. "We still don't know the breadth and depth of all this."

The Standard & Poor's/TSX Composite Index fell 78.25, or 0.6 percent, to 14,153.03 in Toronto, taking its two-day loss to one percent.

Canadian National Railway Co. and other industrial shares fell after the Bank of Canada lowered its economic growth forecast for next year. Energy producers including Canadian Natural Resources Ltd. rose as crude oil climbed to a record.

Royal Bank, Canada's biggest lender, dropped 64 cents to C$54.90. Canadian Imperial Bank of Commerce, the country's fifth- largest bank, slid C$1.40 to C$100.85. Manulife Financial Corp., Canada's biggest insurer, fell 59 cents to C$41.09.

Bank of Montreal, the nation's fourth-largest bank, dropped C$1.08 to C$62.09 on speculation it may join a $80bn fund proposed yesterday by US banks including Citigroup to refinance some investment funds holding securities backed by assets linked to US sub-prime mortgages.

A measure of finance stocks, the biggest among the S&P/TSX's 10 industry groups with a 30 percent weighting, fell 1.2 percent.

Raw-materials shares fell 1.1 percent as group as Gold retreated from 27-year highs in London and New York and Copper, zinc and lead fell in London. The materials stocks account for 18 percent of the benchmark.

Teck Cominco, the world's second-largest zinc miner, dropped C$2.53, or 5 percent, to C$47.68. Barrick Gold Corp., the biggest bullion miner in the world, declined 78 cents to C$41.25. Smaller rival Goldcorp Inc. retreated 61 cents to C$31.73.

Canadian National Railway, the nation's biggest railroad, dropped C$1.18, or 2.3 percent, to C$50.85, leading a 1.1 percent decline in economically sensitive industrial shares.

Smaller rival Canadian Pacific Railway Ltd. fell 74 cents to C$67.85.

The Bank of Canada cut its 2008 economic growth forecast, citing the drag on exports from the US housing slowdown and a currency that's at a 31-year high against its counterpart in the US, Canada's biggest trading partner. Policy makers raised their growth estimate for this year, citing consumer spending and higher prices for Canada's exported commodities.

The central bank left its main interest rate unchanged at a six-year high of 4.5 percent, as predicted by all 25 economists in a Bloomberg News survey.

A measure of Canadian energy shares added 0.6 percent as crude oil rose above $88 a barrel for the first time In New York, on concern Turkey may attack Kurdish militants in Iraq and disrupt oil shipments.

Canadian Natural Resources, the country's second-biggest natural-gas company, climbed C$1.56 to C$73.67. Petro-Canada, the nation's third-largest oil company, advanced 71 cents to C$52.63.

Canadian Oil Sands Trust, lead partner in the biggest oil- sands miner in the world, advanced 76 cents, or 2.3 percent, to C$34.01, after shareholders of smaller rival Western Oil Sands Inc., a partner in Canada's Athabasca Oil Sands Project, approved a C$5.8 billion ($5.9 billion) takeover by Marathon Oil Corp.

Jim Prentice, Canada's Minister of Industry yesterday approved the acquisition. Last week he caused some concern among investors after he appeared to be questioning some foreign takeover of Canadian companies, saying he may toughen foreign-investment rules to consider whether a transaction may harm national security.